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2019 (12) TMI 33 - ITAT BANGALOREClaim for deduction u/s 80P - AO had rejected the claim for deduction u/s 80P for the reason that the assessee has carried on business with nominal/associate members, who cannot be called as ‘members’ within the meaning of sec.80P(2)(a)(i) - Whether “nominal members” and “associate members” would also quality as “members” within the meaning of sec.80P(2)(i) also requires examination in the light of provisions of Karnataka Co-operative Societies Act and/or Bye Laws of Society - In the instant case, the Ld A.R is also contending that there is difference between nominal members and associate members. HELD THAT:- In the case of Citizen co-operative Society [2017 (8) TMI 536 - SUPREME COURT] the majority of income was derived from nominal members and general public and hence the Hon'ble Supreme Court held that the business of the assessee is in the nature of a financial institution and not in the nature of providing credit facilities to its members. Hence the component of income derived from members (who are eligible to participate in profits) and other persons may also require examination and may influence the decision to be taken with regard to the eligibility of the assessee to claim deduction u/s 80P of the Act. If majority of income was derived from members (who are entitled to participate in profits), then the question that would arise is, whether the assessee would be eligible for deduction u/s 80P of the Act fully or proportionately in proportion to the income derived from members, who qualify as participators in profits. This question also requires examination. The foregoing discussions would show that the entire issue requires fresh examination at the end of the assessing officer. Accordingly set aside the order passed by Ld CIT(A) and restore all the issues to the file of the AO for examining it afresh. After affording adequate opportunity of being heard, the AO may take appropriate decision in accordance with law. Assessee is treated as allowed for statistical purposes.
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